Key Terms Case Study

Question 1

Average cost

Answer 1

This refers to the cost per unit produced. It is derived from the total cost of output which is divided by the number of unit produced.

As business grows the average cost will tend to decrease due to economies of scale.

Question 2

Challenge

Answer 2

A challenge is an external or internal event that hinders in any way operations or profitability of an organization.

External challenges can include, competition from other music festivals, technological breakdowns during a concert, government regulations (eco friendly guidelines) or adverse weather conditions

Question 3

Company

Answer 3

A company is a business owned by shareholders who have limited liability. Companies like BON are incorporated organizations. Where shareholders are legally distinct from business. There is a division of ownership (shareholders) and control (directors).

Question 4

Contracts

Answer 4

Legally binding agreement between two parties such as the employer and employee. Legal agreement sets out specific conditions established for work related matters. BON has contract with employees (permanent an temporary), the five farmers (rent land for music festivals) and freelancers

Question 5

Costs

Answer 5

Refer to the items of expenditure in a business when producing goods and services.

BON has salaries of managers and administrative, rent payment to farmers, advertisement expenses and corporate taxes

Question 6

Above the Line Promotion

Answer 6

The use of mass media such as television, magazines, news papers or radio) for advertising products and services. Aimed to reach a wider audience. Improve visibility on a large scale.

Established 20 years ago and hosting music festival for five years, most probable utilizes aspects of above the line promotion. Highly effective to building awareness and attracting customers from various locations

Question 7

Advertising

Answer 7

Is the main form of promotion used to build and shape brand awareness. it can help foster a customer’s perception, knowledge and attitude toward a product, service or brand such as BON, their music concerts or festivals. Communicates marketing messages in a persuasive and informative way

Question 8

Agents

Answer 8

Is an independent person to the organization authorized to act on behalf as another in business dealings.

BON could use agents to hire their temporary workers and music performers

Question 9

Bank loans

Answer 9

a fixed amount of money borrowed form a bank (financial institution) with regular fixed payments, including some interests, over a defined period of time. Loans are usually provided by banks with the security or collateral of borrowers.

The Covid 19 Pandemic is likely to have caused some major cashflow issues in BON, possibly necessitating external finance sources such as loans

Question 10

Below the line promotion

Answer 10

Refers to the use of non mass media promotional activities.

Examples in BON include special discounts for larger groups, social media marketing, an targeted tech engine marketing.

Question 11

Board of Directors

Answer 11

The Board of Directors is formed by a selected group of senior executives that represent shareholders. It is the governing body that oversees operations and makes strategic decisions. The BOD meets regularly to discuss changes in policies and practices such as BON’s expansion

Question 12

Brand

Answer 12

This refers to the distinguishable name, symbol, image or trademark of a product or business, such as the BON name. As an intangible asset, it differentiates the product or organization to competing products or firms

Question 13

Brand awarness

Answer 13

Refers to the extend a brand name is recognized and well known by potential customers. Brand leaders have high brand awareness amongst existing customers and potential where as less known brands, have lower brand awareness.

BON has been in the industry since 2001, will have brand awareness in the music festival world

Question 14

Brand loyalty

Answer 14

Refers to the degree in which customers keep repurchasing same products and services overtime instead of buying form rival firms. Strong brand loyalty exists when customers are committed to certain brands and repeat orders time after time.

Eg. Same people return to BON’s concert year after year.

Marketing strategies designed to cultivate brand loyalty can give BON a competitive advantage in the industry

1. Reward programs
2. Customer service
3. Personalization
4. Engagement through social media
5. CSR

Question 15

Break even

Answer 15

Exists when total sales equal total revenues, therefore no profits or losses are made. Common objectives for new business as from that point they can strive to make profit.

Rising costs can be a challenge for BON as its break even level sales will increase.

Question 16

Business functions

Answer 16

Refers to the various types of work carried out by businesses. In larger work is often divided by organized which carry out certain activities related to that area. Functions might be most efficiently carried out by organizing businesses into departments, functional areas.

Question 17

Business owner

Answer 17

The legal proprietary of the business organization. This can be an individual or group such as BON’s shareholders, with legal rights to assets of the business including any profits generated form the operations.

Question 18

Business plan

Answer 18

Is a written document that details how an organization sets out to achieve their objectives and the strategies to achieve these goals. it written by the owner and describes the legal structure, the market, the product or services, the financial projections, operations and implementations, organizing and management and the risk analysis.

BON’s business plan may include policies and procedures to deal with music events, such as human resources needs, marketing strategies and operation management.

Question 19

Capital expenditure

Answer 19

The use of finance in a business to to acquire, maintain or upgrade its non current assets. It is an investment by the business.

eg. capital acquired for the head BON office

Question 20

Carbon emissions

Answer 20

This refers to the green house gasses emitted by human activity and business operations such a the energy used to power BON’s music festivals.

Long term impact include global worming, loss of biodiversity, habitat degradation, depletion of natural resources…

Question 21

Carbon footprint

Answer 21

is the total amount of greenhouse gases produced by an individual, group, product, organization or event (music festival). It is measured in global hectares and it takes into account the following factors:

1. Carbon uptake
2. Grazing land
3. Fishing grounds
4. Crop lands
5. Built land
6. Grassland

Question 22

Career prospects

Answer 22

Also known as career opportunities refers to the future probability of sucess of an individual in a certain job. Important within the workplace for recruitment and retention. Due to seasonal nature of BON there are little to no career prospects.

Question 23

Cash flow

Answer 23

This refers to the motion of cash into (mostly due to income and sources of finance) and out of business (mostly due to purchases and expenses.

Effective cashflow management for BON becomes essential as they only have cash inflows during 4 moths.

Question 24

Cash inflow

Answer 24

This refers to the movement of cash into the business due to sales (such as merchandise, food and water sold at location) and services such as (mainly ticket sales). It can also come in the form of bank overdrafts, crowdfunding or loan income

Question 25

Cash outflow

Answer 25

This refers to the movement of cash out of an organization, such as the payment of wages, (to temporary and freelancers) and salaries (to full time, permanent employees), rental payment (to farmers) and taxes to the government.

Question 26

Climate change

Answer 26

Refers to significant, long-term changes in the patterns of temperature, precipitation, and other atmospheric conditions on Earth. Used to describe the modern phenomenon of global warming driven by human activities, especially the emission of greenhouse gases like carbon dioxide and methane, which trap heat in the Earth’s atmosphere.